jainen

>>this would help her when she goes to sell the rental<< A tax return is a lot easier to deal with than a tax lien in another state. You would end up filing retroactively anyway. Also, if there are suspended passive losses you can use them in the year of sale. The biggest problem is to make sure Georgia and Colorado treat depreciation and other property issues in the same way as federal.

>>bought the Flip house in Florida<< Nice place to visit. >>don't know what he told the mortgage company<< Maybe HE knows. At least you can probably figure out what he told the IRS about the interest deduction on a second home. >> 1099C goes on Line 21<< Unless he threw everything he had down that Sunshine State hole, and was insolvent.

>>On the 1040 Line 14 I show a large loss<< His story is that spending $141,000 didn't add anything to the value? Well, I trust we aren't talking travel & entertainment costs here. Anyway, spending that kind of dough on things that the market doesn't like suggests a personal dream home more than investment goals. Did he happen to tell the mortgage company this overpriced acquisition was owner-occupied? Since he doesn't have a business, don't use Form 4797 "Sales of Business Property." Report the loss on Schedule D unless you determine it was personal-use property.

>>One LLC can umbrella various business activites, so you should only need one Schedule C for the LLC<< The LLC entity is disregarded for tax purposes, so you have to report in the same way an individual would. A separate business requires a separate Schedule C. Although you can sometimes combine similar activities or include de minimus activity in another, you must not do it in a way that violates passive loss rules or affects benefits that depend on net income, such as office in home or hobby loss.

>>you can refuse that 12 million + market<< He might be a pretty good client. He is motivated to file properly or be banished. He is price-sensitive but has a lot of potential referrals. In the whole universe there are greater evils than fudging a government number so you can work hard and support your family.

>>I would love to turn her in.<< You haven't described anything improper about her. They are difficult clients so it's appropriate to charge more. It's a lot of work getting immigration and work status straightened out, but it is good work and it sounds like she knows how to do it. You don't need corrected W-2s to file those back years. $200 a month seems low but I would at least run a dependency support worksheet since the family obviously meets the relationship and residency tests.

>>Drake now has a rebate calculator built into their software.<< Lacerte's notice is nicely provisional. "The Economic Stimulus Act of 2008 includes a provision for the government to issue tax rebate checks. Based on data included in this 2007 tax return, the estimated rebate amount is ________." It is not part of the letter, but a separate statement in the compliance analysis that the preparer can discard.

>>I quit after that<< I quit when they made me sell "Block check," $25 to review a return. I felt that made me a paid preparer under Circular 230.

>>1099a Box 5 is checked, yes.<< It is in the lender's interest to characterize this as a recourse loan whether it actually is or not. Unless your client is satisfied with $31000 income from cancellation of debt, take a look at the original loan agreement and the foreclosure documents.

>>Client was furious about her case<< If you don't like what Block offers, you shouldn't go there in the first place. As far as I can see they are very open about their guarantee--excessively so. The standard guarantee is that they will pay any penalty and interest from their error, so at least you are no worse off. They will only refund tax prep fees if your tax liability was actually lower than they said, but that's not a forever guarantee. It only runs until the end of the year. The Peace of Mind -- which supposedly wasn't offered but she couldn't have missed it in a Block office -- extends the time limit to three years, which may not even cover all the time it is subject to audit. Where do they ever say they will fix errors that the IRS hasn't even challenged? No where. They say if they pay a claim it will be straight cash (reported on a 1099 no less!). The only free service they guarantee is audit assistance. Your client wasn't audited so it's entirely fair to charge for an amendment. If she doesn't like their guarantee, she is perfectly free to go some place else.

>>California doesn't require a copy to be filed<< Franchise Tax Board has greatly expanded services for My Account on its web site this year, including wage and withholding information. Be sure to take the Spidell update class next fall.

>>3 months ago<< That's eligible for help from the taxpayer advocate. Let them be the pushy ones. You don't really have any rights, because the IRS is free to reject or ignore an amended return. You can't expect them to be very accommodating when someone tries to commit EIC fraud.

>>the parents gift the amount of the mortgage payments to the child every year<< A gift is when you don't get anything in return. These folks get housing. You can say the expense offsets the income in this below-market rental, or you can say the taxpayer incurs neither expense nor income, but you can't say he gets the deduction without any income.

>>Kiplinger & TurboTax published a list of 11 most commonly overlooked tax deductions<< In general, I find Kiplinger tips to range from incomplete to ludicrous. One of the items on this most-common list is that some jurors waive their stipend but then pay tax on it anyway. So I'm skeptical of their suggestion that TurboTax is the way to do serious cost basis analysis.

>>And what if they do 8 in 2008? Would that change your opinion?<< Regs say once you get above five properties you may run into trader status. Otherwise I would still call it investment since the profit and loss come solely from market forces. If they bought houses to fix up before selling, that would constitute a business activity because the profit comes from their own work.

>>any free web site that will perform this calculation?<< The calculation isn't the problem -- simple addition. But getting the numbers requires a massive database constantly updated for all cusips. That's not something that can be maintained without substantial cost, so I wonder how robust the TurboTax function is. I notice they don't feature it on their website as one of the big advantages . I believe the publishers of ATX software do offer a cost basis lookup as one of their research tools.

>>I thought box 5 checked YES, took care of your comment<< It does, unless the lender lies about it. But that would never happen, because mortgage companies are just about the most honest people in the country.

>>next year you will report the debt forgiveness<< Foreclosure for less than the amount owed will not necessarily create debt forgiveness. Some home loans, especially purchase money, are non-recourse. Where the lender enforces a deed of trust rather than a mortgage, the borrower is not personally liable and the property satisfies the entire debt. The balance owing is considered part of the sale price even if it exceeds FMV, and there is no relief of debt income.

>>new basis is the net book value of the old vehicle plus what ever is paid<< That's what MarkM actually did, albeit a bit awkwardly.

>>I don't know why anyone does trade-ins<< Have you ever tried to show and sell a thousand-dollar truck?

>>The letter for today is Q<< That guy from Star Trek Next Gen.

>>Adj basis of new truck $24,675<< That's right, based on $27,490 (but note that you have given us a transposed number.) This is an interesting exchange because they have to defer a LOSS on the old truck. A simple way to check your calculation is to add the loss to the effective purchase price (FMV minus rebate).

>>remind your client's about the imputed interest rules<< And remind them what commingling business and personal assets can do the liability shield which was the whole point of forming an S-corp.

>>it's probably jainen's fault<< Please go back to the original post. I am one of the 2,999,455 who are NOT responsible. And that makes sense because here in Santa Cruz, although we breathe guilty fear like an inhalant, we never actually take responsibility for ANYthing.

>>He wrote the wife a check for half per the divorce settlement. Does she not have to pay the tax on the part that she got?<< No, of course not. She didn't get any income, just a share of property value that was already hers. Does the divorce settlement say anything else? Apparently he could just write her a personal check for the amount, so it didn't necessarily have to come from a particular account. If he chose to withdraw money instead of borrowing or selling other assets or even negotiating a different settlement, who are we to start adding new provisions?